Microsoft reports 57% drop in Lumia sales during 2015 Q4

Perhaps a better indicator of its cloud strength is what the company calls its combined cloud business, on track for $9.4bn in annual revenue, the company said. Cloud services and server products saw a 10% revenue increase. According to Microsoft, “Office commercial products and cloud services” revenue grew five per cent in constant currency, “driven by Office 365 revenue growth of almost 70 per cent”.

Overall though, Microsoft’s revenue declined by 10 percent year-over-year to just $23.8 billion for the quarter, which makes it all the more important that the company to sustain its cloud growth.

Profitexcluding certain items in the fiscal second quarter, which ended December 31, was 78 cents a share, and sales adjusted for deferrals were $25.7 billion, Microsoft saidin a statement Thursday. Windows 10 adoption continues to outstrip expectations, with roughly 200 million devices running the operating system. Microsoft began rolling out Windows 10 previous year, aiming to revive the tech giant’s fortunes. Ahead of Microsoft’s earnings, Raymond James analyst Michael Turits estimated that Microsoft’s Azure business would hit $501 million in revenue in the December quarter. That interest could extend to a Surface phone, helping Microsoft address the “app gap” that has long plagued its mobile business. On the negative side, there is the floundering personal computer business, which is hurting profits from longtime Microsoft software businesses, especially Windows.

“Our commercial business executed well as our sales teams and partners helped customers realise the value of Microsoft’s cloud technologies across Azure, Office 365 and CRM Online”. The launch of the Surface Pro 4 and the Surface Book pumped the revenue up to $1.35 billion, with a year-over-year increase of 29%.

Microsoft is going through a tough turnaround process in an even tougher market, and despite some encouraging quarterly results today, it’s not all good news. Microsoft bought the internet calling service in May 2011 for $8.5 billion.

Microsoft reports in three segments, the largest being More Personal Computing, which is the division that produces the core Windows operating system and the Xbox video gaming system.

“One thing we’re noticing is that with anyone who moves to the cloud, there is a real opportunity for us to expand to multiple workloads over time”, said Nadella on the call. Conversely Windows Phone revenue dived dramatically, it was cut in half in constant currency, apparently following Microsoft’s cunning plans and “reflecting our strategy change announced in July 2015”.

The most significant decline was a fall in phone revenue of 49% in constant currency.